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TheStreet Open House

Concho Resources Inc. Reports Second Quarter 2013 Financial And Operating Results

Stocks in this article: CXO

In the second quarter of 2013, the Company tendered for and subsequently redeemed all of the $300 million 8.625% senior notes due 2017 at a premium to par. In part to finance this tender and redemption, the Company completed the issuance of an $850 million add-on offering to the Company’s 5.5% senior notes due in 2023 at 103.75 percent of par (resulting in a 4.884% yield) with the remaining proceeds used to repay amounts outstanding under its credit facility. As a result of the tender and redemption, the Company recognized a loss on the extinguishment of debt of $28.6 million.

The Company’s cash flows from operating activities (GAAP) were $487.1 million for the first six months of 2013, as compared to $611.0 million for the first six months of 2012, a decrease of 20%. Adjusted cash flows (non-GAAP), which are cash flows from operating activities (GAAP) adjusted for settlements paid on or received from derivatives not designated as hedges, were $494.7 million for the first six months of 2013, as compared to $587.3 million for the first six months of 2012, a decrease of 16%. For a description of the use of adjusted cash flows (non-GAAP) and for a reconciliation of cash flows from operating activities (GAAP) to adjusted cash flows (non-GAAP), please see “Supplemental Non-GAAP Financial Measures” below.

In the second quarter of 2013, the Company collected net cash receipts on derivatives not designated as hedges of $1.6 million and the non-cash unrealized mark-to-market gain on derivatives not designated as hedges was $68.7 million. In comparison, the Company collected net cash receipts of $8.3 million on derivatives not designated as hedges and reported an $394.8 million non-cash unrealized mark-to-market gain on derivatives not designated as hedges in the second quarter of 2012. To better understand the impact of the Company’s derivative positions and their impact on the statements of operations, please see the “Summary Production and Price Data” and “Derivatives Information” tables at the end of this press release.

Operations

For the quarter ended June 30, 2013, the Company commenced the drilling of or participated in a total of 196 gross wells (144 operated). The Company had a 100% success rate on the 245 wells that were completed in the second quarter of 2013.

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